The error I get is:
Undefined control sequence.
}}}}
The control sequence at the end of the top line
of your error message was never \def'ed. If you have
misspelled it (e.g., `\hobx'), type `I' and the correct
spelling (e.g., `I\hbox'). Otherwise just continue,
and I'll forget about whatever was undefined.
your code is okay, I have no problems running it with LaTeX. So I can only guess, what happens. Do you have a \usepackage{graphicx} in the preamble?
Herbert
p.s.: your xfig image is a five-liner with pstricks.
http://www.pstricks.de
